Chancellor warned business rates could 'paralyse' pubs

By Liam Coleman

- Last updated on GMT

Increase: the hospitality trade is the only industry that is seeing an increase in rateable values across the whole country
Increase: the hospitality trade is the only industry that is seeing an increase in rateable values across the whole country

Related tags: Rateable values, Business, Commerce

Pubs are in danger of being 'paralysed' by new business rates, the Association of Licensed Multiple Retailers (ALMR) has warned after writing to the Chancellor calling for rates reform.

Ahead of the Budget in March, the ALMR has urged Chancellor Philip Hammond to consider reforming the way that rateable values for pubs are calculated.

The new business rates take effect in April this year and research from the association has found that pubs will, on average, see a 15% rise in rateable values, despite most other industries seeing a reduction.

ALMR chief executive Kate Nicholls told The Morning Advertiser ​the Association had written to the Chancellor because the industry was approaching a "crucial moment".

"Our letter to the Chancellor, and much of our main Budget submission, concentrates on the issue of businesses rates – an issue that the ALMR has been fighting for years.

"We now approach a crucial moment where the Government must act to ensure that rates bills are equitable, in order to protect investment, growth and employment in our sector, which is a key economic driver.

"Business rates are an issue for many businesses, but the unique way in which they are assessed [in the licensed trade] means that the problem is magnified for pubs. This is the only sector facing increases in rateable value in every UK region.

"Pubs are being paralysed by exorbitant rates, which often can mean putting off investment or employment. We need action on this issue right now to protect the futures of the UK’s pubs and bars," she said.

Unique calculations for pubs

Business rates for pubs are calculated differently to other businesses, as they take account of trading potential as well as site value, an issue that's consistently come under criticism​ from trade bosses.

Nicholls told BBC Radio 4's Today ​programme that this was just one area that results in pubs paying unfair business rates.

She said: "Uniquely for pubs, rateable values are based on trading potential, as well as what the property could be rented for. That is why we are paying a disproportionate burden of business rates.

"Over the course of the past seven years, we have seen an explosion of e-commerce, which the business rates regime hasn't kept pace with. Retailers and businesses with office space can now generate the same amount of turnover from a much smaller physical premises. Pubs, bars and restaurants are bricks and mortar premises that can't be moved online, so they are bearing a disproportionate burden."

The ALMR’s letter to the Chancellor has, therefore, called for him to consider introducing transitional relief for licensed premises – similar to that recently offered to broadband providers – when the new rateable values take effect in April.

'Sends out the wrong message'

The Glasgow Chamber of Commerce is another trading body, which, in recent days, has added its voice to the growing calls for rates reform.

The group's chief executive, Stuart Patrick, said: "We are in a situation where licensed premises are subject to a different assessment process than businesses in other sectors, creating an unequal playing field.

"Glasgow’s night-time economy which includes world-class restaurants, bars and nightclubs, is a key driver for people choosing to visit the city and this revaluation process sends out the wrong message. Businesses in the leisure industry should closely check their revaluation and start the appeal process if they are affected by a large rise in rateable value."

Related topics: Legislation

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